With a quorum present Mayor
Elizabeth G.Flores called the meeting
to order.

II.PLEDGE OF ALLEGIANCE

Mayor Elizabeth G.Flores led in the Pledge of Allegiance.

III.ROLL CALL

In attendance:

Elizabeth G.Flores,Mayor

Alfredo Agredano,Council
Member, District I

Louis H.Bruni,Council
Member, District II

John C.Galo,Council
Member, District III

Johnny Amaya,Council Member, District IV

Eliseo Valdez, Jr.,Council
Member, District V

Jose A.Valdez, Jr.,Council
Member, District VII

Juan Ramirez, Council
Member, District VIII

Larry Dovalina,City Manager

Cynthia Collazo,Assistant
City Manager

Jaime Flores,City
Attorney

Motion to excuse Mayor Pro Tempore
Guerra.

Moved:Cm.Bruni

Second:Cm.Agredano

For:7Against:0Abstain:0

IV.STAFF REPORT

1.Presentation and discussion regarding the Development Agreement between
the City of Laredo and Arena Ventures, L.L.C., for the Laredo Entertainment
Center, with possible action.

Carl Hirsh, representative from Stafford Sports, emphasized the
main points discussed in the Development Agreement.A complete copy of the Development Agreement can be found at the
City Secretary’s Office.

2.Presentation and discussion regarding the Operating Agreement between
the City of Laredo and Arena Ventures, L.L.C., for the Laredo Entertainment
Center, with possible action.

Carl Hirsh, representative from Stafford Sports, emphasized the
main points discussed in the Operating Agreement.A complete copy of the Operating Agreement can be found at the
City Secretary’s Office.

Questions from Council Members:

Cm.Ramirez

Cm.Ramirez stated,
“That gentleman over there said that the ball park in Arlington is having a
great success, but that is a major league baseball park, if that is what he
meant.This is going to be an arena
that will house a western professional hockey league, and we cannot compare to
that area.You have a great balance
Fort--Worth Metro Plex in that area and there are more people out there than
here.”

Mayor Flores asked, “What is the
question?”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L. P.
stated, “My reference is solely to sales taxes that are generated and not
making any comparison other than we will provide in the bond documents the
ability to use sells tax to pay off the bonds early to the same extent that
they did in Arlington.”

Larry Dovalina, City Manager stated, “Is it viable to assume
that you are going to have the capability to pay off the bonds in a shorter
period of time than what you are actually issuing the bonds for?”He continued to say “when we made the
projections for the bond, in this particular place, I think that we used a
figure of a little bit over 2 million dollars and we were not projecting that
under the current structure, the sales tax is coming at a little over $3
million dollars, so we are already capable of starting to accelerate the
process.”

Mayor Flores stated, “It doesn’t have anything to do whether it
is professional basketball, baseball or hockey--it is a separate issue.”

Cm.Ramirez stated,
“Another thing that I am not comfortable with is the twenty-five year lease
with Arena Ventures.I am not in
agreement with that.Also, like
Councilman Bruni said and mentioned about the 1.2 million, the cost of
roadways, curb gutters and whatever infrastructure-- that somebody is going to
pay the other half. That is still quiet an expense. And, actually, what we are
doing is that we are starting a good business for somebody else that is going
to run it for twenty five years and, basically, we actually won’t have any say
so, other than we will probably get peanuts out of it.That is the way that I feel.”

Mayor Flores
stated, “Thank you for your personal opinion.”

Cm.J. Valdez

Cm.J.Valdez asked, “What percent are the
architects going to be charging for the design?Is that on the total construction, or how are they figuring that
out?”

Kiki de Ayala, representing Arena Ventures, stated, “The fee is
approximately 6 ˝ percent, that is for architect, engineering, as well as the
consultants like sound and a variety of other consultants that he will have to
use.”

Cm.J.Valdez asked, “I am just curious why--is
this coming out of whose budget?The
offices for the construction--The city is going to have their own office at the
location?”

Carl Hirsh stated, “This is for the city.”

Cm.J.Valdez asked, “What is the
percentage of hiring local people?”

Carl Hirsh stated,” What the developer has agreed is to take
the city goals as they use them on all other projects and attach that as an
exhibit to this.”

Larry Dovalina, City Manager, stated, “I think that addresses
the issue where he talks about hiring qualified sub-contractors within the city
as stated in the sentence itself, and the majority of our subcontractors are
considered minorities except in Laredo.”

Cm. J.Valdez questioned,
“On page 17, 5.1 it states in the center of the paragraph the project
developer shall select the general contractor.The project developer shall consult with the city with respect to such
selection but the project developer shall have the sole right to select the
general contractor.Now on 3.3F it says
that the services of the general contractor with the city’s approval?”

Carl Hirsh stated, “If you look at the rest of 5.1, it talks
about being from a qualified list--contractor meets the General contractors
qualifications which is what 3.3F is referred to.And it will be an exhibit to this which talks about the
qualifications that any contractor has to have, and a list of potential list of
contractors that meet that qualifications.”

Cm.J. Valdez questioned,
“My question is, and I know that they are going to present somebody, but do we
have approval, because over here on 3.3F it says that we have approval?”

Carl Hirsh stated, “ Yes, we have approval over the list.We have to agree to what the qualifications
are for the contractors and the list that is submitted in the exhibit.Once we approve that, and we agree to that
with the developer, they can pick any one of those.”

Cm.J.Valdez questioned, “As far as change
orders, will you explain that?All
change orders come before council or only certain amounts?”

Carl Hirsh stated, “The only change orders that have to come to
council are ones that you are willing to pay for.Other than that anything that you guys are responsible for--
money your representative has to run it through your process to approve
those.Any change order to the project
that the developer does as long as it meets the program standards and the
quality construction standards, it is his nickel so he can do it.”

Cm.J.Valdez stated, “Where it states project
developers shall make all necessary arrangements to permit at the operator
selection.The operator shall have
partial occupancy prior to substantial completion.Is that for the offices?”

Carl Hirsh stated, “It is for the offices, it might be for the
food service supplier, it could be the cleaning crew that needs to set up their
space in advance and any and all of those.A ticket office might go in early.”

Cm.J.Valdez stated, “Would you please explain
force majeure.”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L.
P.stated, “force majeure is what
you would commonly refer to as acts of God -such as storms, some acts of destruction.In some instances materials not being available.”

Cm.J.Valdez questioned, “Is the hockey
equipment part of the contract?”

Carl Hirsh answered, “Yes, that is projected to be part of the
F F & E budget.”

Cm.J.Valdez questioned, “How many days is the
City going to get the facility?

Carl Hirsh stated, “Twenty-two.”

Cm.J.Valdez questioned, “How did we come up
with that number? That was before I was here, so I’m just curious.”

Mayor Flores answered, “There were several ways that we came up
with the number ofdays.I’ll ask Mr. Hart if he remembers, but one
of the things that we did was, we went back to the Civic Center and the
different Community events verses the times that they actually leased it for
something but a community event where we would use--i. e. graduations and those
sorts of things and came out with those day.Remember, even though it is a community event, it is not free to the
city; it is not free to the operator; it is not free to the guy that has to
turn on the lights because there is still an expense.Just like Cm.Ramirez
wanted us to waive a fee for a particular Mother’s Day program at the Civic
Center--and there is no such thing as waive the fee.It has to come out of somebody’s budget.And so we figured that we could afford
twenty two days.”

Cm.J.Valdez questioned, “Are we going to
submit a calendar, and how many days prior are we going to do this?”

Carl Hirsh stated, “There will be a booking procedure that will
come in place.It talks about the
primary tenant getting the first route of dates and then there will be a
booking procedures once the management company is on board, and then that will
be through the City representative and the manager of the building who will
work out how that will go forward.”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L. P.
stated, “It is twenty-five years, and then there are two five-year options
to extend that the Operator may exercise.”

Carl Hirsh added, “Just on that term issue, the outs for the
city, if you will--if the operator is not performing their duties and operating
and maintaining the building to the quality arena standards, obviously they can
be terminated. It is not a life long sentence without repercussions.”

Cm.J.Valdez questioned,“Now another question, and this is something
that I have been talking to a lot of the community, a lot of police
officers--and I don’t know if they would agree to--Arena Ventures would agree
to hire these people, but as far as security-- I know that is says they have
the right to hire whoever they want.I
have been talking to a lot of police officers, and they like to see that they
hire certified peace officers.That is
first choice of security.”

Carl Hirsh stated, “It is an issue that we have talked about,
and the operator is willing to obligate itself to the extent that they use
peace officers based on the type of event and to the number that they
have.They will look first to hire
Laredo Police Officers before any others, in other words, county, sheriff or
anything other thanthat.So
they have agreed to that. They have agreed to the extent that when they use
them, they will look first to the Laredo off duty police officers. ”

Mayor Flores stated, “And without hurting the community in the
private sector if there is a time when the private sector security is
qualified, or maybe there will be a mix or something, but certainly that can be
arranged.”

Cm.J.Valdez stated, “I would like to have the
Peace Officer be the first choice.”

Larry Dovalina, City Manager, stated, “There are some events
that require that--and I think the operator is well aware of when those events
are and generally they’re the large public events such as concerts and stuff
like that where they need to have a different kind of mix.And I’m sure that he would be prudent to
that, and I’m sure that is what he is saying when he suggested that.”

Cm.J.Valdez stated, “I would like to see it
for every event, that’s the thing.”

Carl Hirsh stated, “One of the things that I think that is
important for all of us to focus on is--the idea here is for us to get as many
events as possible.And the more things
that we require the operator to do that increases the cost of the building on
an operating bases, limits the amount of events and then we will run into all
sorts of different problems.So I think
that is one of the things that we cannot loose sight of.”

Cm.J.Valdez, questioned, “In reference to the
1.2 million dollars that Mr.Ramirezjust mentioned that we
are going to pay half and Arena Ventures is going to pay half for the roadway?”

Carl Hirsh answered, “yes.”

Cm.J.Valdez questioned, “Is their half coming
out of the 4 percent or is it coming out of the 35 million?”

Carl Hirsh stated, “It is coming out of
the 35.5.”

Cm.J.Valdez questioned, “So in other words, we
are actually paying the whole amount.Is that correct?”

Carl Hirsh stated, “That’s one way to look at it.The way you need to look at it, though, is
for every penny that goes over 35.5, they are reaching in their pocket.So by putting this in the budget, what they
are doing is making it a lot tighter and a harder budget to be able to produce
the product that we are looking for.Yes, they are going at risk.At
the end of the day we will know whether or not we paid for it out of the
project budget or whether or not they paid for it.”

Cm.J. Valdez questioned, “As
far as the method of construction, once the general contractor is hired, I
guess this is more for--Arena Ventures hopefully can answer it.They are going to hire their own consultant
to make sure that the their the contract is going--is that coming out of the 4%
since you are hiring the person it is not coming out of the $35?”

Kiki de Ayala, representing Arena Ventures stated, “That, we
will be hiring our own project consultant to be there on site, and to my understanding
the City will be hiring their own as well.”

Cm.J.Valdez questioned, “That is my concern,
if we are going to pay you 4%, and that is off of the total project or the
$27?”

Kiki de Ayala, representing Arena Ventures stated, “Off the
total project, less some line items, I think”.

Cm.J.Valdez stated, “That is why I’m saying if
you are going to have your person to manage the construction, I guess from the
architect and the general contractor.I
just want to make sure that it is coming out of your budget.”

Cm.J.Valdez stated, “I just wanted to make
sure that from Arena Ventures’ viewpoint, that the Arena will work even if you
don’t have hockey for what ever reason the hockey is unsuccessful, or the
league.”

Dennis Hart stated, “In regards to could the arena survive
without the 35 to 40 days that the hockey might bring?It would be a much more difficult task, but
there are other things at our disposal that we would try to plug in there in
its place.”

Cm.Eliseo Valdez, Jr.

Eliseo Valdez submitted a list of concerns for the record from his
constituents to the City Secretary’s office.

Cm.E.Valdez asked, “How and what way can the
City participate in the profit sharing of whatever they are going to make at
the Arena on the sliding scale.And,
then, our legal reps here gave us some information on that, and can you
elaborate on that--on the benefit that we exercise in the tax exempt bonds and
how we are still going to make money on the ticket sales and the parking fees
that are going to go to the capital fund?”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L.
P.stated, “In order for the bonds
to be issued on a tax exempt basis, the regulations of the treasury require
that none of the revenues generated by the arena be available as part of the
general funds of the City. Thus, without getting too technical or complicated,
if they are part of the general funds of the City, the Internal Revenue Service
deems those available to pay debt service on the bond.We tried to structure this in a way where
the sole revenue that could be looked at as being available to pay the debt
service is sales tax.In an effort to
have some of those funds flow into the City, we have restricted those funds to
flow into the Arena, and that is the $1 seating charge and the $1 parking
charge, the share of the naming rights. All are anticipated to fund the City’s
contribution to the renewal and replacement account of $125,000 a year that
Mr.Hirsh referred to earlier.If there are surpluses in addition to
$125,000, there will be a special operating account established in the bond or
authorization instrument to be held for additional uses with respect to the
arena.To do any more than that would
cause a potential problem with the tax exemption of the bonds and would cause
the City to incur additional interest cost in trying to sell the bonds at a
taxable basis rather than a tax exempt basis.”

Cm.E.Valdez stated, “Now, I do know that
Estrada Hinojosa and our staff used very conservative figures in looking at the
economic sales tax, and we, the City, do have the option of retiring the bond
as early as possible because the figures were quiet conservative, and we expect
to do a lot better than we have in the past years.”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L. P.
stated, “I’ll speak for my partner who you all know, Mr. Tart, who will be
doing the bond transaction, but the bond document will provide for that kind of
flexibility.If we generate--the ball
park in Arlington is a perfect example.They’re going to pay those bonds off next year because the sales taxes
generated well-exceeded expectations and thus they are able to retire those
bonds many years prior to their maturity.And we will provide for that in our transaction as well, that
flexibility.”

Cm.E.Valdez stated, “In looking at the bond
requirement and Mr.Carl Hirsh already
elaborated on that and just to touch on it again as far as having negotiated
the risk during the operating and developmental stage do you feel quit
comfortable with the bond that we came up with and the formula that was used to
come up with that figure?”

Carl Hirsh answered, “Yes, and we will talk about both
different pieces of it.In the
Development area we have 2 ˝ million dollars in a letter of credit direct pay
to the City.We have half of their
development fee at risk, so we feel that there is a substantial amount of cash
that’s actually there in the budget.”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L. P.
stated, “Plus, Carl is--I may add--if the budget plus off cost exceeds
$35.5, the letter of credit that Mr.Hirsh referred to will be increased by the amount of the overage.”

Carl Hirsh stated, “In addition, there will be a contingency in
the actual budget of $35.5 so we know that there will be some cushion there to
be able to bring this in.So we feel
good that we are in the right spot in an effort to get that done.On the operating side what we have is five
years of operating history.Right now
we don’t have any operating history, which is why we wanted some
protection.So we got 2 ˝ million
dollars, which lets us operate that building for at least a year flat out.If they walk away on day one, the city is
protected.We have money in which to be
able to operate that and go find someone else who will go at risk and operate
it for us. But we are protected because that money is there.After a five year operating history, first
we will be building up our reserves through the various funding sources that we
have so we will always have some money in reserve to do that as well as the
initial operating reserve that we do as part of the bond documents.So, yes, we feel very comfortable that we
have protected the City’s downside in both cases.”

Cm.E.Valdez stated, “The formula that we used
to come up with the capital fund--you know, the taxpayers voted for the
economic sales tax.The facility itself
is going to be an asset for the community and for the taxpayers. Are we satisfied
and comfortable with the formula that we used to come up with the figures so
that at the end of the contract with Arena Ventures, or whoever it may be, that
we have a facility as good as when we started?”

Carl Hirsh stated, “The figure that we used of $250,000 - $125
per partner, if you will, is in the initial five years.There is a five-year review of that figure
to make sure that we are still on target, in terms of keeping the building up
the way we want it as the owner and the operator is performing.So after five years, we will be reviewing
that, as well.After our last meeting
it was requested that we get a chance to look at the facility fee and the
parking fee after five years.Arena
Operators has agreed that we will do that.We will revisit the issue very five years.”

Cm.E.Valdez stated, “What about matching the
improvements around the arena itself by the development group?Are they going to be matching our
development as we go across and make sure--we don’t want a facility sitting out
there in the middle of nowhere.It’s not
in the middle of nowhere, but they are talking about additional development
around the facility itself.”

Carl Hirsh stated, “The arena developer has a 42 month option
on the surrounding land right now.If
they exercise that option and deliver to us within that 42 months a development
plan, then we are satisfied that there is going to be some development
happening, and we are on our way as long as it is an improved development by
the City.If, however, they fail to do
that for reasons other than the world has fallen around us and development is
not happening anywhere, which they will have to come and prove to us at the
City, then they will have to continue that letter of credit for, not only the
five years, but for an addition 24 months on top of that.So they are going at risk for an additional
two years of that letter of credit if they are out there by themselves, and
they are not going to survive because there is no other development around.”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L. P.
Attorney – “Just so there is no confusion, we have two (2)2 ˝ million dollars letters of credit.The one that we just heard recited is the
Operator Letter of Credit the one we have to envision covering O & M cost
at the arena.”

Cm.E. Valdez stated,
“And you touched on it earlier, the language in the contract to keep them from
selling their interest to a smaller outfit with less credential without our
approval.You already talked about the
assignment clause.Can you elaborate on
that?”

Carl Hirsh stated, “The bottom line which I know that you are
interested in is they need the City’s consent.”

Cm.E.Valdez stated, “One more question came to
my mind as we were talking about security and certified police officers.And I agree with that, but we are a growing
city, and as a growing city we feel some growing pains, and as big as we are
and as fast as we are will we have something in the contract.Or what will we have in the contract? I know
this question should be to SMG or to Arena Ventures to keep anything from
coming in there that is going to disrupt any public security or public safety.
Let’s say we have not experienced some of the things, like the big cities have
problems with hate groups who want to hold a convention here or things like
that.Can we have something in the
contract to prohibit anything like that?”

Carl Hirsh stated, “I think there is a two-part answer to
that.The first is that they have to do
things that are within the quality arena standards and lets not forget that.That is very important.The way they operate this building has to be
in a quality way that is viewed by other buildings and they cannot.Number two is you internally have a
permitting process on how you allow things to happen and not happen in the City.So you have the ultimate control in what
happens.”

Cm.Johnny Amaya

Cm.Amaya stated, “Can
we share the revenues and if not explain why.”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L. P., “There
are two ways to answer that question.Yes, you can share the revenues if you are willing to give up the
ability to issue tax-exempt bonds.And
our direction was that you wanted to issued tax exempt bonds.”

Carl Hirsh stated, “That is the legal issue.There is also a business issue that goes
with that where the developer and the operator is taking all the risk.So if you want to participate in the
profits, they may want you to share in the risk. So one of the things that was
directed to me very early on by City Staff is you didn’t want any risk. So we
focused very hard on not putting the City in any situation for risk.”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L. P.
stated, “This is why you have a team negotiating transaction.”

Cm.Amaya questioned, “How are we doing on the arena football?”

Dennis Hart, with Arena Ventures stated, “In fact, we have a
couple of gentlemen here tonight that are interested in the arena football
venture, and we just came back from the western professional hockey league all
star game in meetings, and it just so happens that several of the owners of
WPHL also hold arena football franchises. So we are at a good opportunity to
get their thoughts on how to make it succeed and I think that we are bullish on
it.I think that we will make that
happen.”

Mayor Flores stated, “And let’s not forget the Spurs commitment
to do their exposition games here in Laredo.”

Dennis Hart stated, “I will tell you from my perspective that I
have been blessed to be involved in a lot of big and complicated and sophisticated
business deals, and this is by far the most complicated and sophisticated
business that I have ever worked on.And from day one that we sat down and first approached the Mayor and
bounced the idea off of her, it was clear that the City’s position then, from
day one, and from the City’s position to this meeting tonight that the City
wanted no finance risk in this transaction.I think that these document bare that out.I will have to tell you from our stand point there was a couple
of stages in the negotiation where we had to back up and take a deep breath and
search deep in our souls and say do we really want to do this and the answer is
“yes”.We think that this is a fairly
constructed deal, and we are ready to move forward.”

Cm.John Galo

Cm.Galo stated, “I wish
you could elaborate a little bit more on the 22 days.I don’t think that you spoke here.Now we can walk in there rent free is that what I understood?”

Carl Hirsh answered “Correct, rent free.All you pay are out of pocket expenses to
operate the facility on that day.”

Cm.Galo stated, “So we are going to pay the light on that day.”

Jeffery Leuschel from McCall, Park Hurst, and Horton L. L. P.
stated, “Yes is the answer, but you do get all the revenues on that day.”

Cm.Galo stated, “Do we
have a clue at this time, in your past experience, what it will cost?”

Carl Hirsh stated, “It really does depend on the kind of event
and what kind of load you have to do.It is very early to do that.I
don’t think it would be in the operators best interest to make it cost
prohibited for you to go in there and do an event.We have their commitment to work very hard with the City to make
that work.”

Cm.Galo stated, “When
we say no commercial events, how about if we have a free event?”

Carl Hirsh stated, “That, as long as it is not something that
they would be able to bring in for money, I think that the answer is, you can
do that.If you are going to bring in a
concert because you got someone to sponsor it and it is something that they
could have gotten and made money on, then they will have a problem with that.”

Cm.Galo stated, “Let’s
take and example--what was the one where the supplies for the school--Johnny
Canales, when they filmed that and all you had to do is bring school supplies
to get in.It was held at West Martin
Field and it was free.”

Carl Hirsh stated, “Absolutely.You will always have the ability to ask.”

Cm.Galo stated, “We are not exclusively prohibited from doing that?”

Carl Hirsh stated, “This is the layout of the twenty two
days--is basically to take of the things that were in the Civic Center;that is why we built in the twenty two days
such as graduations, boy scout jamborees, police functions, etc.”

Cm.Galo stated, “So if
we donated it or gave it over to all the schools for their graduations, they
pay the fee which is whatever- staffing and lights, air-conditioning, insurance
- to run this. We in turn can give them the revenue from the concession.It is all in the profit from the concessions
stand.”

Carl Hirsh stated, “It would be the net part of it, parking and
then the concessions. Again, if they sell t-shirts for the graduating class –
any of those kinds of revenues.If they
have sponsors for temporary signage, that kind of money would go right back to
them.”

Cm.Galo stated, “ I
wanted to go over a little bit on the letters of credit.You spoke about it earlier.The first on the development phase--it
doesn’t go into effect until they have acquired a franchise.Is that the way that I understand it?”

Carl Hirsh stated, “It’s one of the conditions precedent to the
bond sale.It has to be in place 30
days before we sell bonds as well as the proof that the hockey team has been
acquired.The same 30 days before we
sell the bonds.It is simultaneous.They both have to be in place 30 days before
the bond sale.”

Cm.Galo stated, “Will
we have recourse if the league folds?”

Carl Hirsh stated, “The way the documents are written is that
they have to have a hockey team to be able to commence the operation
agreement.Once the operation agreement
goes into place, if they don’t have a hockey team, they really can’t take over
the operation.I think if something
like the league folding happened we would sit down in good faith with the
operator and try to figure out a resolution.When they in good faith built the building and the league folded around
them.I think that there is a question
between a business issue and a legal issue there.”

Cm.Galo stated, “And
that LC either goes away or just gets transferred into the Operation LC?”

Carl Hirsh stated, “There will be a second LC because there is
an overlap between the Development Agreement and the Operation Agreement. When
you have had substantial completion of the Development Agreement you actually
will be operating already, so for a period--”

Cm.Galo stated, “And
the operating also, it doesn’t stair step down?It is the 2.5 million over a five year period?”

Carl Hirsh said “Correct.”

Cm. Galo stated, “If they don’t exercise their options, an
additional two years--so they could have it potentially seven years exposure.”

Carl Hirsh stated,“One
thing--I want to go back in terms of their exposure during the development
period.We talked about what our
protection was.In addition to the
money that they put up, they will have purchased a hockey team by that
time.They spent money over this
development period so it would be very difficult as a developer just to pick up
and walk away with a little problem.I
think that the exposure will deal if there is a major problem.I think that is an exposure in any
development field.”

Cm.Galo stated, “Where
did the twenty-two days come from?”

Jeffery Leuschel from McCall, Park Hurst, and Horton L. L. P.
stated, “Again, I think that the Mayor’s response was looking at the Civic
Center use and coming up with that use based on the Civic Center use.”

Cm. Galo stated, “Let me just ask, then, if by agreement that
would entitle us to some more days.Say
they don’t have it rented and we say, hey, we have something we would like to
use?

Carl Hirsh stated, “I am not going to speak for them, but I
will speak from my experience as being an operator from facilities across the
country. If a municipality came to me and I had a dark day, why wouldn’t I give
it to them.”

Cm.Galo stated,
“Going back to that also what we talked earlier.If the ice was up and it was a free day, a city day, would we be
able to use the ice or open it up to ice skating?”

Carl Hirsh stated, “That would be one
of your twenty-two days.”

Cm.Galo questioned,
“That would not be in contest with their revenue because if they used it as a
revenue source?”

Carl Hirsh stated, “You would not be charging for it, as I
understood it.Is that correct? I don’t
remember getting into this conversation when we talked to the operator.I don’t know their plans for skating in the
arena.I do know that we talked about
the city being able to use it as a skating rink as one of your twenty-two
days.”

Cm.Galo stated, “I
just want to make sure--let’s just say that the year has gone out and we have
only used eleven (11) days and we have 13 days left and there are ten days left
in the budget, can we just open it up?The ice is up.We want to make
sure that there is not going to be a conflict.”

Carl Hirsh stated, “I don’t believe that is going to be a
conflict.”

Cm.Galo questioned, “We
know we have ten days left in the budget and they would know in advance their
bookings would have been there already right?”

Carl Hirsh stated, “I said they are going to set up a booking
procedure where we get the operating plan nine (9) months in advance.They will talk about how the primary tenants
gets its dates, and they will talk about how they are going to book the rest of
the buildings, and you are next on the list.You would go through that, and one of the things that you might want to
do is tentatively say, this year we think that we are only going to use it 15
days, there are several left, so let’s see what you are doing for
Christmas.The Hockey team is going to
play there. Maybe there are days that the hockey team is not playing there; we
want to hold it for the city.”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L.
P.stated, “If you do not use your
twenty-two (22) dates in a year, they do not carry over to the next year.

Cm.Galo questioned,
“Do we have any idea at this point how many parking spaces we are going to
have?”

Carl Hirsh stated, “No is the answer.But they will provide us with a parking plan as the design moves
forward and it has to be done in compliance with the City Codes and
Ordinances.”

Cm.Galo stated, “When
we pay off the bonds, and lets say we go back and look up the revenue streams
and the tickets seasonal, can that criteria change?”

Carl Hirsh stated, “Because the bonds have gone away and they
are no longer outstanding.But let’s
remember one thing--we voted the sales tax for this project and once the
project is paid off then the tax ceases.”

Cm.Galo stated, “Even
though the institution was built with tax bonds we are free of any other
obligations as far as that so our criteria, when we look at the ticket price or
something else--did you clarify it with a twenty five year lease, with two five
year extensions?”

Cm.Galo stated, “What
happens if we come in at $34 million?Do we save the money?”

Carl Hirsh
stated, “ Yes, the City will save the money.”

Cm.Bruni

Cm.Bruni stated, “Arena Ventures is a LLC Limited Liability Corporation,
do we have a problem with that?”

Carl Hirsh answered, “I will speak from a business prospective
and let Jeff speak to you from a legal prospective.It is very common that these projects are done by Limited
Liability Companies or Joint Ventures or Limited Liabilities Companies
throughout.That is done even in the
major stadiums from a business prospective to protect liability in both the
development and in the operating from the parent companies.From a business prospective, it is something
that I have seen everywhere in the country and how these things are done.”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L. P.
stated, “We were concerned because of asset issues and alike, and that is
why we have two letters of credit; that is why we have reservations on payments
of the development fee; that is why we have some of the other protections,
monetary protections, built into the transaction because, yes, it is a concern,
and yes it is common, and we felt that this is the best way to mitigate some of
those asset concerns.”

Carl Hirsh stated, “We will follow up with him and get you the
answers to those questions.”

Cm.Bruni stated, “In
terms of infrastructure cost of the City verses cost of the 20 acres that are
being donated, where are we with those numbers?What are the numbers?What is the cost that the city is going to incur in infrastructure,
verses the cost savings that the city will save by accepting 20 acres?”

Beto Ramirez stated, “The total cost of the roadways are
approximately 1.2 million dollars, and that will include the construction of
the streets, curb and gutter, lighting and sidewalks.”

Cm.Bruni stated, “So
the total cost of the City’s infrastructure is going to be 1.2 million- that includes everything?”

Beto Ramirez stated, “Arena Ventures will pick up half of that
cost and the City will pick up the other half.It will be through interest earnings on the bonds.”

Jeffery Leuschel, from McCall, Park Hurst, and Horton L. L.
P.stated, “It is intended that the
interest earnings on the construction fund will cover the City’s portion of the
street improvement cost.The agreement
so provides.”

Cm.Bruni stated, “So
let’s make it clear now, there was a 1.2 million dollar figure thrown out
there, and you said, Mr. Ramirez, that half of that is Arena Ventures and the
other half is the City’s obligation; is that correct?”

Beto Ramirez, Budget Director, stated, “Yes sir.For further clarification the $600,000 that
Arena Ventures is responsible for is in the project budget.It is part of the $35.5 million dollars.The City’s portion of $600,000 comes from
the interest earnings that the bonds will have throughout the life.”

Cm.Bruni stated, “You
spoke about Arena Joint Ventures—has a two month option to secure how many
acres around the 23 acres?”

Carl Hirsh stated, “Forty-two, I don’t know exactly how many
acres.Actually, it is 60 acres.”

Cm.Bruni stated, “So I
guess since the City is putting a $35 million dollar building there, the sixty
acres should be worth a lot of money.I know that it is business, but business is business, and we are also
business people up here.Maybe we
should have some kind of--or how shall I put it where it is not to
offensive--some kind of partisans with your acreage over there also--Work out
some kind of agreement where…?

Mayor
Flores questioned, “personally?”

Cm.Bruni stated, “The
City is going to be the anchor guy there.We are putting a $35 million dollar facility there, and they have the
option--and me being a businessman, I just think this way; I am programmed to
think this way.They are going to have
acreage around there, and we know that they are also going to have risk.I guess I’m thinking like my mother when she
does and oil an gas lease.She always
kind of pushes it to the limit.It is
just something to throw around there.If there will be any way that they can be partners with us, maybe we can
be partners with them. We can put that on the back burner.”

Mayor Flores stated, “And develop a building that doesn’t mind
having 10,000 people at one time in its neighborhood.”

Cm.Bruni stated, “I
would also like to request that the Webb County Sheriff’s Office also be
involved. We would prefer to have Certified Police Officers.”

Cm.Bruni stated, “If I
may finish my thoughts here--where was I? With the security? The traffic?We had a good presentation of the
traffic.I want to make sure that
Jacaman is completed and is in place before the facility is open.That is a must.We look at signalization, of course, on both ends of Jacaman.We have a very popular establishment on the
corner of Jacaman and McPherson that is already a nightmare.Not that I am out at 2 a.m. to see the
traffic leave, but it is a nightmare there already.So you can imagine if there is something going on both sides what
kind of congestion that will create.And I have discussed it with traffic, so they are aware of my
concern.And the last, Mayor, and this
comes to pass, and we do have this facility, I think that it is going to speak
well before the council and speak well for the citizens that approved it, and
it will just be another jewel that will be sitting in District II that I so
proudly represent.”

Cm.Agredano

Cm.Agredano questioned,
“I have about three questions.First of
all, just for my understanding, on the first page of the Operating Agreement on
the engagement of the operator it says that two additional extension terms of
five years each may be exercised on the agreement.Now, does the city have a say so on that?”

Carl Hirsh stated, “I believe it is
their option.”

Cm.Agredano questioned,
“After the 25 year lease or term, or we pay off the bonds, is Arena Venture
going to replace all the cooling and heating because it is a twenty five year
lease and they are going to be twenty five years old?”

Carl Hirsh stated, “That is exactly the reason that we have the
capital renewal and replacement fund, to make sure that we don’t end up in a
situation twenty-five years from now, all those things go at once.We have preventative maintenance that they
are responsible for on a long-term basis and as things deteriorate and need
improvement, that they request in terms of the agreement, they will have plans
to replace all those major systems.”

Cm.Agredano stated,
“Parking spaces for the size of the this Arena, 10,000 seat arena--how many
parking spaces are we talking about?”

Carl Hirsh stated, “First of all, we are talking about 8,000
permanent seats with the ability to go to 10,000 with that.I think it is up there somewhere in the
range of 2,000 parking spaces.”

Cm.Agredano stated,
“The reason I ask is because sometimes you go to the shopping mall or one of
the big stores and you go around and around and you can never find a parking
space for about 10 or 15 minutes.When
you do find one it is about two blocks away from where you are going.”

Carl Hirsh stated, “It is in no ones interest to not have
enough parking and make it convenient for people to park. So as the design
moves forward, the Arena Developer along with your team and the design
consultant that the city has--we will have to look at how it works best to be
able to fit into those traffic flows that you laid out.”

Cm.Agredano stated, “I
have two teenagers, a daughter and a son, and four more that will be teenagers
in a couple of years, and my question will be hours of operation since we have
a curfew law being that concerts go on beyond 12:00 o’clock and 1:00 o’clock.”

Carl Hirsh stated, “I don’t know that we can add to that idea
today. A lot of that depends on the act itself.I’m sure that once an operator gets in there and understands
local ordinances, and they will work with the police department. Most concerts
are over well before 12 o’clock.”

V.ADJOURNMENT

Motion to adjourn.

Moved:Cm.Bruni

Second:Cm.Agredano

For:7Against:0Abstain:0

I hereby certify that the above minutes contained in pages 01 to
18 are true, complete, and correct proceedings of the City Council Meeting held
on the 1st day of February 2001.